Meta, the parent company of Facebook and Instagram, announced plans to launch “aggressive” spending on research of Artificial Intelligence and development of AI products. The news didn’t sit well with the investors and caused the company’s stock to slide more than 14% in after-market trading on Wednesday.
Meta shared its quarterly earnings earlier this week, with the results beating the expectations of analysts. The company saw its earnings per share coming at $4.71 versus $4.32 per share expected, while the revenue of $36.46 billion also beat estimations of $36.16 billion.
However, the company issued a weak forecast for the next quarter, predicting sales to come in the range of $36.5 billion to $39 billion, while the analysts expected $38.3 billion. Additionally, the company now expects to have a capital expenditure of between $35 billion and $40 billion compared to previous expectations of $30 billion to $37 billion due to focus on AI.
“We expect capital expenditures will continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts,” Meta shared in a statement.
Meta’s shares closed at $493.50 on Wednesday but plunged all the way down to $421.18 in after-hours trading and wiped out close to $200 billion of market value. Before the plunge, the company’s stock was 42.51% up year to date.